By -Olufunke Afolami
Delivering his speech at the Nigerian Association of Petroleum Explorationists (NAPE) virtual Conference and Exhibition Management Session, Managing Director of Total E&P, Nigeria Limited, Mike Sangster, asserted, that TOTAL is always delighted to identify with the revered petroleum association.
“NAPE is in partnership of sustainable economic development of our dear country, Nigeria. Over the years, NAPE has made high quality contributions from the annual conferences which have positively impacted our oil & gas industry as well as the Nigerian economy.”
Sangster was of the view that the theme of this year’s management session- “Future of oil and gas industry in low oil price environment: Survival Strategies”- cannot be more appropriate, especially in the current global situation.
“We all agree that Nigeria must plan and exist with the current reality of low prices and optimise its opportunities and strengths to enhance its competitiveness. Nigeria will no doubt need to advance in the area of innovations, strategies and best practices.”
The TOTAL helmsman said the country needs to strategize in the following areas:
Technology: With the help of technology, the world is now able to access oil from domains previously unimaginable. The result is an abundance of oil and gas resources around the world. The challenge now is how to deploy technology to drive down costs in order to remain competitive.
Collaborating to drive down costs: although the purpose of business is for profit, a situation that makes competition inevitable, for better cost efficiency, there is need to explore ways of collaboration as partners with the same ultimate goal, to share projects and associated costs that would ordinarily overwhelm an individual player. These could be envisaged in areas such as rig clubs, seismic vessels sharing, just to mention a few. An enabling policy is inevitable for success in this regard.
Reduction in incidence of oil theft while boosting oil and gas production: One of the main challenges facing oil and gas companies’ operations is that of pipeline vandalism and oil theft with estimated large volumes of oil stolen in the oil-producing areas across the country. Undoubtedly, some measures have been put in place to end this menace, but a more concerted effort would further minimize the incidence and associated financial loss and ultimately help the industry survive in these trying times. Hence, the issues of security around installations and operating environments need to be addressed holistically.
Sangster emphasised on a win-win Petroleum Industry Bill (PIB) that TOTAL is keen to continue to invest in Nigeria and willing to contribute constructively to the ongoing debate on the Bill.
He stated that Nigeria has only benefitted from less than 5% of all investments in oil and gas in Africa between 2015-20191 despite having the largest reserves.
This means the USD 3bn invested in Nigerian projects which took Final Investment Decision (FID) between 2015 and 2019 represents 5% of all oil and gas funds invested in Africa.
According to Sangster, no major investment decision was taken in Deepwater Nigeria between 2015 – 2019, despite a number of available potentially viable projects.
Also, uncompetitive fiscal terms, increasing cost, unsettled deep water disputes, and upcoming deep-water lease expiry all contribute to increase the risk for investors and prevent new investments.
The TOTAL MD commended the efforts being made by the authorities to define a long-term framework for the oil and gas industry that provides clarity and certainty as well as attractive terms which translate to a win-win solution for the country and investors. This will further attract more capital investment in an ever more competitive world. “A progressive, win-win PIB will no doubt be the catalyst needed for a new wave of hydrocarbon exploration and development investment in Nigeria.”
Diversification and pursuit of new energies: Even before this period of heightened concerns about the COVID-19 which has brought about a reduction in global demand, firms and countries eager to reduce their carbon footprints had been out with strategies and an evolving energy mix in the shift towards cleaner energy.
The challenge for companies like TOTAL is to strike the right balance between enabling the energy transition by investing in new energies such as solar and wind power while continuing to provide oil and gas to meet the needs of the company’s customers and society.
Consequently, in order to respond to the current global crisis, there is need to manage through the uncertainties and seize the identified opportunities. “The overarching message here is: Let’s develop Nigeria’s abundant resources now, before it is too late.”
TOTAL is part of the solution to climate change with a commitment to delivering reliable, affordable and clean energy to the population. It has made important investments locally in this area and implemented several initiatives that are already impacting the Nigerian energy landscape positively.
Impact of TOTAL Contributions
Over 1.5 million people in Nigeria have been impacted from sale of 400,000 Total solar lamps since 2013 according to Global Lighting Off-grid Association estimates. Worldwide, 10 million people have been impacted.
Out of TOTAL 577 service stations across the country, more than 77 have been solarized as at the end of January 2020. It’s an ongoing program and the company target is to ensure that its stations become fully solarized. TOTAL also deployed over 150 residential solar solutions across the country.
Sangster pointed out that TOTAL investment in the NLNG from the beginning till now, is partly derived from its commitment to the production of cleaner and better energy.
TOTAL Group Roles
Sangster said TOTAL ambition is to become the responsible energy major and to get to Net Zero carbon emissions by 2050.
In order to achieve this objective, the company has identified some key initiatives:
Promoting the use of natural gas, biogas and hydrogen, investing in low-cost oil and biofuels, investing in low carbon electricity, mainly from renewables, investing in carbon sinks that are essential to achieving carbon neutrality, either nature-based solutions or carbon capture, utilization and storage.
Sangster explained that TOTAL will continue to hold faith in Nigeria. It is the same spirit that saw the company make the investment that led to the development of the 200,000 bpd EGINA field with 1st oil in 2018 at a time the investment climate was not the most appealing. The IKIKE development project is currently in progress with the drilling of development wells commencing in 2021. Nigeria is crucial to the TOTAL Group, accounting for around 10% of its equity production.
TOTAL has invested approximately 10 billion US dollars in the country from 2013 to date. It has also taken steps to drive down our green-house gas emissions; pursuing a zero-flare principle on all its new projects as is evident with EGINA, OML58 upgrade, OFON field and others.
The company’s faith in the country has also seen it maintain an annual Corporate Social Responsibility (CSR) spend of over $40 million (USD). TOTAL maintains at least 19 Memorandum of Understandings (MoUs) with its host communities. The MoUs facilitate a seamless delivery of sustainable development to its host communities.
“As we did in 2019, we just rounded off the commissioning of 14 legacy projects across the country and we are going to do more. This is aside from thousands of students’ scholarships and skills acquisition programmes that we maintain annually. The inaugurated projects include mammography centres, maternal and child referral centres, science lab theatres and women development centres, amongst others. We had to take up the challenge of virtually inaugurating the projects which became more relevant in the wake of the COVID-19 pandemic.”
Sangster is confident that oil and gas will remain important resources that can launch Nigeria to the level it deserves to be, when properly harnessed and with the right investments; made possible with the right fiscal and regulatory policies.
He advised stakeholders in the oil industry, that as the country seeks to build and make every industry contribution to the economy sustainable, the conference is one of the main avenues it would look to for ideas.
“It is my expectation that this conference will come up with ideas and implementable decisions which can guide both industry and government in repositioning Nigeria’s oil and gas industry for sustainability.”
The NAPE conference is a great gift that oil industry professionals can give to the country to celebrate the diamond anniversary.
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